New EMI Digital Music Chief: ‘Suing File-Sharers Not Sustainable Policy’

Former Google CIO also says that file-sharing may actually be a “good thing.”

EMI may just be the record label that pulls the music industry kicking and screaming into the 21st century. After being acquired by private equity from Terra Firma in the middle of last year it was quick to slash jobs and cut costs associated with the old physical media distribution model. It then subsequently questioned not only the practice of suing its own customers, but in particular those that are single mothers, children, handicapped, disabled veterans, or even deceased. To this end it made the RIAA and IFPI copyright holder lobbying organizations justify EMI’s continued membership in both. Each reportedly complied and vowed to streamline their operations as well as narrow the focus of their purpose.

Now EMI may just ruffle some feathers even further by naming former Google CIO Douglas Merrill the name chief of EMI’s new digital unit. His role will be to oversee all of the company’s digital strategy, innovation, business development, supply chain and global technology activities. The move is significant because it places somebody with a technology background and no music sales experience in charge of a new unit dedicated to the future of music distribution.

It places a person who self professes to be “passionate about data” in charge of the future of the music industry – digital distribution. This “passion” means that he’s even remarkably aware of the data out there “…that shows that file sharing is actually good for artists,” he says. “Not bad for artists. So maybe we shouldn’t be stopping it all the time. I don’t know…I am generally speaking (against suing fans). Obviously, there is piracy that is quite destructive but again I think the data shows that in some cases file sharing might be okay. What we need to do is understand when is it good, when it is not good…Suing fans doesn’t feel like a winning strategy.”

Even more astonishing is that he too used to illegally share music files as a youth!

Merrill will set EMI apart from other record labels because he plans to actually experiment with different business models in order to achieve a winning strategy that produces profits and not losses for the company. Instead of clinging to a business model repeatedly proven to be a failure, he vows to take a look at new ones like music subscription services, an ISP fee, or even a Google-esque ad-supported model.

“I think there is going to be a lot of different models,” Merrill said. “Those are two (subscriptions and ISP fees) you can imagine. I’m not sure that either one of those will be the most dominant model. But they are both interesting. We should try them and see what the data says. Other options will be things like you can imagine supporting music through relevant targeted ads, the Google model. There is a dozen of other things…we should try them all. We should see what the data says and whatever it says, we should follow the data, and follow our users and let them help guide us. We should engage in a broad conversation about art.”

As if the Merrill couldn’t be even more of a dramatic shift in record industry thinking, he even professes to be a NIN fan and thereby very aware of how music artists have become dissatisfied with music labels over the years. He sees their dissatisfaction as a challenge for EMI to figure out how it can become an asset for musicians rather than a seeming liability that sues and overcharges their fans.

“Given that as a system we need to understand how record labels fit in there,” Merrill continued, “I think the Nine Inch Nails’ release of Ghosts experiment was fascinating. What a great problem to have: people are trying different things. If everyone tries the same thing you’ll never learn anything new. Instead we’re in a situation where people are trying things. How cool is that? Some are going to work. Some aren’t going to work. But we need to try them.”

The fact that Merrill is simply willing to experiment already helps set EMI apart from other record labels by leaps and bounds, and how sad is that? He only pledges to run his business competitively instead of in a reactionary fashion as it was before. “We should do a bunch of experiments to find out what the business model is,” he even says.

Moreover, the fact that he admits that there’s truth to published studies proving that file-sharing has a net positive effect on music sales is what’s most remarkable.

“I think people will pay,” Merrill said. “There is evidence that people we think are not buying music are buying music. They’re just not buying it in formats we can measure.”

EMI is currently the smallest of the so-called “Big 4″ music labels, but with ideas like these it may not be that way for much longer.